tv On the Money With Maria Bartiromo CNBC June 30, 2013 7:30pm-8:01pm EDT
. welcome to "on the money." i'm maria bartiromo. today coming to you from the aspen idea festivals from the world of finance, politics and arts have gathered. the market stopped their slide. interest raids stopped their climb. why, and what's different this week? also, a rare conversation with former treasury secretary hank paulson. a look back at the stressful days of the financial crisis. a look ahead to where he thinks the economy is headed now. renowned cellist yo-yo ma makes beautiful music. but how does he make a profit? digital dollars, classical music and transformational money. "on the money" starts right now.
>> announcer: this is america's number one financial news program. "on the money," now, maria bartiromo. >> what's making news as we head into a new week "on the money." the markets returned to rally mood with a bang. the dow industrials posted the best three-day winning streak in nearly a year, with triple-digit gains on tuesday, wednesday and thursday. the streak, though, was broken on friday. the move came after fed officials were out and about, saying that the fed had no immediate inattention of raising interest rates. and that the markets had misinterpreted ben bernanke's statements last week. lloyd blankfein told me -- >> chairman bernanke said we'll be very data dependent, but if the data reflects growth and very much focused on unemployment specifically, we'll taper ourselves off of quantitative easing. potentially by the end of the
year. not necessarily if the data doesn't support it. >> the final measure of the gdp was revised downward to 1.8% growth. that's down from a previous measure of 2.4%. less than expected and due in part to weaker personal consumption. housing remained a bright spot. the s&p kay schiller was up in april. surpassing expectations. it also had the biggest annual gain in seven years, due to partly tightening inventory and fewer foreclosures. sales of new homes rose to the highest level in five years, to an annualized rate of 476,000. the market certainly felt different this week. did anything fundamentally change, or did they just take a deep breath and redetermine what ben bernanke was talking about. university of chicago boot school of business professor,
and host and senior editor of american public media's marketplace. gentlemen, good to see you. thanks so much for joining us. what is your take? so many fed members this week, governors, officials spent the week walking back ben bernanke's comments basically trying to make it clear that interest rates aren't going up anytime soon. do you think bernanke miscommunicated to the market? >> maybe. i think -- >> did the markets misinterpret? >> i thought was what happened is the market was taking a drink of water, and he said something, and then they spit it out and said, what did they say? and the rest of the fed said, no, no, you didn't need to spit out your drink, it's no different than what he was saying all along. >> 95% of the transparency from the fed, that they explain what they're doing, is for the good. but the 5% that we also need to keep in mind is, this does generate more news on the day,
when they actually say things. and so that's just going to add volatility. i think that's what happened. >> i thought it was interesting that after chairman bernanke came and said his piece, he sent all these other people out to sort of -- >> i don't know that they just don't do his bidding. >> okay. >> they wanted to make clear their points. >> was anything really different this week? the market seems calmer. we had some gains. it certainly felt different after the reassuring words from the other fed members. >> i think it's all about the markets realizing everything that ben bernanke says does not have to be necessarily taken as gospel. on thursday they came back and said, you know what, the economy has been a victim of misunderstanding of what ben bernanke said. i think he would go back and -- if he had had a stock ticker there, he would have said, you know what, let me revise my previous remarks. it would have been all over in
ten minutes. >> in realtime. >> i hope that the fed, and usually the fed does not, i hope they're not just looking at the stock market and saying, how is the stock market reacting? we have to change our statement. i think they freak out a little as rates started going up rapidly, as people concluded, as ky said, they're con cluesing more than what they thought he was saying. >> the bond market and ten-year t-note, not to get technical, but it's ul up a full percent in 60 details, which is bananas. >> gdp revised downward this week. there was strong news on other fronts in terms of housing, and other areas. but gdp was revised down. a lot of questions about unemployment. >> inflation is still bupcuss. >> i think the economy is doing
fine. not as well as anybody wants. but it's growing in gdp, we're adding jobs in this economy, and it's not what we want, but it's growth. it's positive. >> i think that's true. i think some part that's hard to distinguish exact live what proportion, but one part was a little freakout. where you're seeing things that might easily morph into a big financial crisis because of the credit squeeze that's going on in china. their rates really going up. but i don't think that the growth we've seen, as modest as it was, is enough to convince people that the fed is going to really pull the plug on this thing earlier. >> let me ask you about this landmark ruling this week. ky, the supreme court ruling that the federal government cannot ban gay marriage. a lot of big corporations talking about this, lining up in favor of this ruling. what kind of impact does this have on the corporate side of
things as well as the economy? any impact? >> i think actually what will happen is it will take second place to what happens on the federal side. there are plus or minus a thousand different rules, a thousand different benefits that heterosexual couples get that gay couples didn't get this past week. and then corporations will line up and follow up. they'll have to. >> look, in many sectors are, they've answered this question a long time ago. if you had to track talent, you want to get whoever has that talent, they've been offering corporate level benefits to domestic partners for a long time. if they change the rules in las vegas, you know, the wedding economy may be booming in the next six months. >> that's very funny. we're at the aspen ideas festival. what has struck you so far? >> i'm still looking for the extraterrestrial life. we've had a lot of science. but on the economic side, the
issues, and ky had an important panel about consumer spending and the nature of the economy going forward, can it be what it was before, is it going to be something fundamentally different. that's a pretty big idea. >> they had big ideas in science. a lot of sessions on space. a couple sessions on small business. >> a lot on the future of television news, by the way. >> that's right. the digital revolution. what do you think is the talk of aspen? >> i think there are two things. one is, our role in the consumer economy. i think we've been talking about before we went on the air, talking about the consumer and the economy. we need to think about how we, as people in this economy, you know, want to keep on buying. and the other one is, as i talked about media in the future, what it's going to look like, it's not going to look like this ten years from now. >> we'll leave it there. good to see you both. thank you very much. up next "on the money," a rare conversation with former treasury secretary hank paulson. we'll talk ben bernanke and why
jrjs welcome back. from beautiful aspen, colorado. as the markets speculate on the federal reserve's next move, i sat down with the man who helped pull our economy back from the brink of disaster. former treasury secretary hank paulson. five years after managing the financial crisis, he weighs in on the fed pullback and the future of the u.s. economy. >> ben bernanke has done an excellent job of preparing the plarkt for the fact that -- for an inevitable fact that this extraordinary intervention by the fed and extraordinarily low interest rates, that is going to eventually have to end. now, as i look at it from
100,000 feet, what the fed has done has been very important. because over the last five years, we've had a very necessary massive deleveraging of the economy, and the financial system. and we've been able to grow around 2%. so that's quite an accomplishment in and of itself. and the fed's policies have been, you know, to a large extent responsible. to me, it's just completely unrealistic to assume that those programs could be phased out without some market volatility and some pain, because market participants, some of them are addicted to these abnormally low interest rates. the big question is, why is the fed the only game in town. okay? why is it? what we need to do is we need to get our economy growing faster than 2%. we need to deal with the deficit. the only way you're going to do that is bipartisan compromise. we need an immigration bill. we need a tax reform that lets us raise the revenues we need,
and be competitive. we need to reform medicare and social security. so we need more, and we need more action from congress and the executive branch. >> in terms of the fiscal policy. why is it so -- i mean, you're a business guy first. but you were in government, you know how it works. how is it so difficult to get tax reform going and an immigration agreement? >> well, to me, that's really the question. i think the fed has been asked to do a lot, because, you know, the rest of the government is doing very little. frankly. and so we need some of these other things. and we have to win challenges. and they go together. and they are the need for more growth, and for more actions to deal with, with the debt problem, with the deficit. >> a lot of people would like to see mortgages move to the private sector. it's still 90%?
of mortgages are issued by fannie and freddie? >> yeah. at the time of the crisis, i think the we did that was the single most effective thing that got the least attention, because we acted before the markets panicked, is to get in, stop failure, stabilize, essentially nationalize those entities, and they were like nine times bigger than lehman brothers. it would have been disastrous if they failed. and then they provided mortgage financing, which kept housing prices from dropping further in a worse crisis. but it never dawned on me that, you know, they were insuring about half, a little bit less than half the mortgages. now the government more than 90%. and how did we get here? we got here because of flawed government policies, overstimulating housing, fannie and freddie are growing zero. as you said, the key is getting
the private sector under this. because if the government is setting the prices on your mortgages through a subsidy, what you're going to do is you're going to ultimately get things that it's not market reality, it's not economic reality. and you will get another bubble again in housing. >> so we're setting ourselves up right now then, unless a change is made? >> we should have a plan in place to transition to a time when the private sector can play a much bigger role in terms of financing mortgages. >> let me ask you about china. you've been spending a lot of time in china since departing washington. what do you make of what's going on right now? the moves we've been seeing in china? we know things have slowed down. how would you characterize the economy right now? >> what the slowdown shows is that the leaders know they need to reform their growth model. it's running out of steam. they know they need to reform their financial system.
and they're willing to tolerate slower growth. while they fix their financial system. and i am much more focused on the next three to five years, because i think that the good news is that the country's got strong leadership and knows they need a reform. the bad news is, these are going to be very difficult to execute. there's a lot that needs to be done. >> my thanks to hank paulson. up next "on the money" from child prodigy to rock star. cellist yo-yo ma reveals the secrets to his success. and maybe he'll play a little something for us. something for us. d idea.th us.
once a child prodigy, yo-yo ma grew up to one of the most classic musical industry's most famous performers. he mentors the next generation of artists. it's wonderful to have you on the program. >> it's great to be here, maria. >> we love having you. we want to find out your background. you were with the same label, sony. what's the state of the classical music industry today? are audiences still engaged in terms of purchasing and recording music? >> what's interesting, what we
hear statistically is one version of the truth. because, you know, one of the things that i love about working with young people is that you see sort of what's going to be in our future three, four years from now. because young people are thinking so deeply about all of these issues. and they're coming up with wonderful solutions. one of the things we've started is a cultural entrepreneurship program. and with the harvard business school, with the undergraduates, with the dean of the arts and humanities. and so what we'll see three years from now will be the results of what these young people are thinking about. and in terms of young groups starting out, there's so many more ways. it's less expensive to record, which means that you can then be your own marketing person, if you are interested in that way. but there's going to be a lot of development, and then probably
it will coalesce into fewer but different ways of making music and distributing it. >> it's interesting that it is less expensive to actually record. it's getting cheaper for the artists. >> absolutely. >> and that must be encouraging a lot of new artists. >> absolutely. that means that people can -- you know, you have that many more groups, that many more people who can do it. but of course, that -- >> can afford it. >> na can afford it. you can make a cd for under $5,000. for the people who really care about it, who think about society in different ways, i think those people are actually going to find the connections, and do well. >> with digital businesses like itunes and pandora, has that affected classical music consumption? >> i think there are just many more ways of delivery. >> right. >> and i think there is access, you have satellite radio, you can -- online streaming.
so what is interesting is, i'm not sure that we're capturing all the people that are listening and participating in what you call classical music. and there's another thing. classical music is also changing. it's not -- >> what was it. >> -- you know, it's rather young people really loving something and then turning it into today's music. >> you were a child prodigy, performing for presidents kennedy and eisenhower at the age of 7. >> who knew. >> who knew. what is your advice to young performers out there who would like to follow your footsteps? is a path like yours even possible today? >> it's more than possible. first of all, it's -- i think it's so incredibly important to have people who believe in others. i think we all have done well because we've had mentors that have said, you know, maria, i
know you can do it. also, i think responding to need is incredibly important. so it's not like you're going to be something, and do well, because you're just talented, but it's more how you use your talent. >> i know that one of the things that you're passionate about is education, mentoring. which is so important. it prompted you to found the silk road project. the group is bringing together musicians from more than 20 countries. tell us about that. commissioning over 70 new works. >> in many ways, when you have musicians from everywhere in the world, you can also look at our country and say, we actually have a population that is from all over the world. and i think making that connection back to the rest of the world, and looking at other traditions, is in fact an incredibly american thing to do. and what that does is, we then
develop an empathetic understanding of places that seem far away. because they actually -- the roots are also located in the united states. and i think that's a very good message to send to any student in any school to say, well, what's the best thing you can do in a school, is in fact to feel the connection to the rest of the world. >> we're going to take a quick break. will you play something for us? >> absolutely. >> we're going to take a short break. back in a moment.
i hope you'll follow me on twitter and google plus, look for @maria bartiromo. on monday, the ism manufacturing index will be out. that tracks economic activity in the sector. it will be out for the month of june. also on monday, interest rates on federally subsidized student loans will double to 6.8% for future borrowers. on tuesday, the major automakers will report their sales for the month of june. on wednesday the markets will close at 1:00 p.m. we'll be closed all day on thursday in observance of the independence holiday. the all-important jobs report will be out on friday. thanks so much for joining us. have a great weekend.
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